By now, all of the New Year's resolutions that we made regarding working out, eating right or even quitting smoking have played out. We either did or we did not. Statistics say that most of us have not even come close to keeping those pesky resolutions.

I propose we change New Year's resolutions to weekly resolutions. This way we can begin anew 52 times a year instead of once. Much better odds, don't you think?

"I propose we change New Year's resolutions to weekly resolutions. This way we can BEGIN ANEW 52 times a year instead of once. Much better odds, don't you think?"

When it comes to financial resolutions we should give them the same attention that we should give to eating or living better. Let's start with some activities that can be implemented on a regular basis until they become habits.

Budgets

I have heard them called spending plans and lifestyle and savings programs, among many other names. The bottom line is don't fool yourself by trying to call it something other than it is. It is a budget. Taking control of how and where you spend your money begins with getting out of denial and into the real world of planning and success. You can only make changes and improvements to your financial situation when you know where you are. Budgets tell us where we are.

Complete a monthly budget and remember to account for those annual bills too, such as property taxes or auto insurance. If you are spending more then you are making, then rank the items by order of importance. You may have to eliminate some items, including the cable bill or that weekly dinner out.

Debt

Sometimes I think people think their credit limits on their credit cards are goals to achieve by the end of the month. Let's remember that if we earn $5,000 a month and have a $2,000 credit card limit that it still means we have $5,000 to spend. The credit card is another way to spend the same money.

Complete a debt worksheet that has all of your balances, interest rates and payments in one place. Then total up the balances and payments. This includes you car loans and second mortgage. If you have more than 40 percent to 45 percent of your take-home pay going to your debt (money you have already spent), then some serious adjustments have to be made.

Savings

The savings part of the equation is actually made up three main parts. Currently, America's savings rate is at or near an all-time low. We are saving a smaller percentage of our income then some people in third world countries. The value of saving for a rainy day seems to have lost its value.

The first place to save is an emergency account. You should have a minimum of three months of your monthly expenses set aside in a savings account at a bank or credit union. If you have a job that is not stable or you are self employed, than up to six months would be appropriate.

The next place to save is for retirement. Today there is much discussion on whether or not social security, government pensions or even private pensions, will be there for your future. Saving in your employer's voluntary retirement plan is necessary. If you have the ability and qualify you should consider putting money in a 401(k), 403b, 457 or Roth IRA. If this sounds like alphabet soup, ask your financial advisor, human resource person or CPA to help you decide if you qualify.

The last place to save money is in education accounts. The cost of college has gone up faster than the rate of inflation. Which means your income will probably not grow as fast as the cost of attending college for your young children. Consider saving a fixed amount each month in either a 529 fund or an Education Savings Account (ESA). Again, your CPA or financial advisor can help determine which one, if any, are right for you. The point when it comes to college is that saving something is better than nothing and the sooner the better. If you have been saving for college already, learning which type of plan is right for you is very important since the recent changes made to college funding can drastically impact your plans. Don't forget alternative ways to lessen your education cost, such as attending a community college and receiving scholarships.

Staying focused on the weekly spending plan and keeping debt under control allows us to live a life that is financially stress free.


Arif Halaby is a financial consultant and founder of Total Financial Solutions. Forward questions, comments and suggestions to money@insidescv.com.